The Wealth Divide and the Process of Global Trade Integration

Nguyễn Trần Bạt
Chairman, General Director of the InvestConsult Group
Hanoi, Vietnam




Poverty and the gap between the rich and the poor have been much discussed in the mass media not only in Vietnam but also throughout the world. However, it is important to distinguish poverty from the wealth divide (or rich-poor gap) and to enhance public awareness of these two concepts. More importantly, we should affirm that globalization does not create poverty, but simply makes poverty more recognizable and visible. In the case of Vietnam, in the past, when everyone was poor, the degree and extent of poverty was greatly hidden by the shortcomings of information and communication. When globalization appeared, it began to bring about open and unlimited sources of information, and thus creates an awareness of the people of their own poverty in contrast to the richness of other nations. Many people, thus, hastily blame globalization for making their nations poorer, forgetting that globalization has brought them many chances to develop.

Globalization has infused a fresh breath into all countries, or at least, forced them to realize their own strengths and weaknesses in order to exploit opportunities and face imminent dangers.

Let us have a look at recent developments of the world to realize how the vigorous circulation of capital among countries, the vividly accelerating process of technology transfer, as well as the increasing popularity of labor laws and environmental standards have supported and compelled nations, especially third world countries, to ameliorate their socio-economic pictures. The most important impact of globalization is that it helps countries exploit and develop their comparative advantages more effectively. Seemingly, no longer has the theory of "low labor cost" proved itself to be absolutely right and sustained its primitive color. When globalization was at a low level, the rich countries simply exploited labor in terms of quantity, or in other words, they simply made full use of manual labor. They did not assist the poor countries to increase the intellectual "brain content" of their labor. Today, globalization forces all countries to strengthen and train their labor forces as well as to align their production to universal standards and to rethink of the use of prison labor and child labor.

Globalization has also changed the way we look at investment activities executed by the rich nations. We of the underdeveloped world used to regard foreign investment as a process of exploiting our natural resources, with the investors being the only beneficiaries. Today foreign investment activities are widely recognized as a "win-win" cooperation process. Actually, the investing countries have been redistributing their wealth and helping the poor to create their own wealth. Moreover, by expanding market share, foreign investment makes a significant portion of the population of the developing countries richer, thus increasing their own domestic sales. This investment process will, in turn, support the developing countries, create employment opportunities, and increase favorable conditions for better implementation of hunger elimination and poverty reduction programs.

It is, however, no less important to be clearly aware of the negative impacts of globalization. Firstly, globalization forces every nation to face the danger of being left behind and to accept changes, even very painful ones. Globalization reveals the limitations of each enterprise's capacity for competitiveness, and thus drives them into a risky game with strict regulations to either enjoy the benefits of success or fall into bankruptcy. So, globalization will undoubtedly bring about unemployment as a resulting social evil. Secondly, globalization reveals the backwardness of the capacities of nations, enterprises and individuals. More than ever before, it is time for everyone to reconsider the "purchasability and salability" of the value of their own labor. Thirdly, globalization requires all nations to answer the conundrum of economic development in exchange for socio-political stability because there will be many new thoughts as a result of globalization permeating the society and resulting in temporary but imminently chaos. Environmental pollution is also an extricable problem of all nations thanks to the rapid advancement of science and technology. Above all, democratization plays a crucial role, because it is democratization which helps us to develop the creativity of all members within the society, to properly organize econo-political life, and to enhance competitiveness and sustainable growth.

We should also re-examine the inequality between the rich and the poor. Sociologically, the wealth divide has now become a significant social problem and caused a host of psychological problems with unexpected impact on almost all aspects of the society. This is expressed through the appearance and existence of such psychologies as grudges against the rich, jealousy of businesspeople and antipathy toward untraditionally successful people. In the mass media, the market economy, globalization and free trade are considered fertile lands for corruption, smuggling and other mercenary acts, thus they are blamed for bringing benefit to the rich and depriving the interests of the poor. As a result, the gap between the rich and the poor is increasingly widening. These negative psychologies originate from an incorrect awareness of the wealth divide. Re-examining this problem will help us to form a positive psychology and this re-examination is the prerequisite for further proper measures to eliminate hunger and reduce poverty. This will enhance the process of narrowing the development gap -- the rather vast chasm separating rich and poor nations currently sharing the entire world as a common shelter.


The inequality between rich and poor needs to be seen as an inevitable phenomenon of any society. Never can we erase this inequality because it is the result of the inequality among individuals. What we can do is to improve the living standards of the poor through improving their capabilities. Just by doing so can we form a positive social psychology of the wealth divide, and this positive psychology is also a prerequisite for the resolution of the wealth divide.


We should rethink of the relation between the wealth divide, globalization and the market economy. To once again emphasize, never ever has globalization made people and nations poorer, it simply helps to make poverty and the wealth divide more recognizable and more visible. Also, the market economy does not induce inequalities. On the contrary, these new conditions are now bringing us a more comprehensive awareness of poverty. Moreover, to a certain extent, the rich serve as good examples and their wealth can stand as an incentive for the poor to strive for a better life. It is not at all excessive to conclude that globalization and the market economy represent opportunities for developing nations to rid themselves of their long-lasting poverty.


In a recent televised conference in Vietnam, focusing on the knowledge economy, a young man questioned if he sold his rice field and cattle to pay for a training course on computer programming whether he could rise out of his poverty. Someone answered "Yes". This story demonstrates the hasty psychology of many people who are trying to get ahead at any cost, even by "short cuts". It also shows our limited understanding of real development. Prosperity is not a splendid castle, which can be built overnight as in that man's dream. We cannot give a careless mind to this issue, because it must be solved on both national and international levels, based on the concert of many policies which have been thoroughly analyzed and studied.

Some people think that in order to reduce poverty and overcome inequalities, we should carry out more pro-poor measures via State mandated income regulating measures. However, these measures can be taken in short term only, since we, at present, are not strictly bound by any bilateral or multilateral agreements; moreover, the State has the capacity and capability to introduce production-supporting measures via pro-poor measures. Actually, this process is merely society-scaled alms, which in the long term can never permanently reduce hunger and poverty. Moreover, in the very near future when the integration process reaches a larger scale and a higher level, it will become impossible to maintain many preferential measures since these measures are considered to be trade subsidies, which are taboo in modern trade liberalization.

Apparently, we should undertake another method in order to conceive fundamental solutions to eliminate hunger and reduce poverty in accordance with both international standards and development trends. In my opinion, from a macro viewpoint, we can focus on the following main solutions:

Firstly, improving the capacity of labor to help them win in competition, or at the least, not meet with losses in the globalization process. During the process of globalization and international integration, competition is becoming more and more intense, while the natural capacity of labor in poor nations rapidly turns out to be unsuitable with market requirements. Thus, the labor forces in the underdeveloped nations, Vietnam included, should be improved in terms of quality in order for those nations to actively join the integration process. Labor force improvement is the core of programs on hunger elimination and poverty reduction, and this improvement is a key factor in bridging development gaps. Training and education must be the first and crucial steps in the hunger elimination and poverty reduction strategy. The matter goes beyond the fact that education and training remain inaccessible to a wide range of the poor, it also lies in the fact that our system of training and education is far from meeting the requirements of the labor market, and fails to provide learners with necessary knowledge and skills. Weak individual capacities will cause enterprises to suffer heavily in competition, especially now that the integration process is becoming more and more influential.

Secondly, carrying economic restructural transfer in a flexible way and in accordance with the practical requirements during the integration process. Economic restructural transfer is an inevitable process of economic development. However, to what extent and by what methods to conduct this economic transfer (particularly the methods by which we should transfer labor quality), is an issue that should be intensively and seriously studied. Always discussing how to develop traditional careers, we often forget that these careers have lost their market value, and this sort of labor market should not be encouraged. We also speak of switching from one industry to another, but due to "half-studies", we fall into the situation of switching from one unprofitable industry to another which is equally unprofitable. Consequently, we get poorer because misoriented investment results in wastes of both time and capacity. The economic restructural transfer program, thus, should not be carried out "at any cost", but should be based upon scientific studies in order to create positive changes that can satisfy market requirements. In any case, we should not limit our thinking of economic restructural transfer only to changes in the production objects, but also as transfer in technology, management and the mechanism of the labor market. Otherwise, it will bring losses to the poor, and the wealth divide becomes in danger of being widened.

Thirdly, developing rural areas as the core of the strategy on hunger elimination and poverty reduction. As a country with the majority of the population living in rural areas, the rural areas in Vietnam are considered central to this strategy. According to official statistics, there are many Vietnamese farmers living at less than 1 USD per day. Thus, rural areas must be considered to be the main focal point and rural development to be the core solution to hunger elimination and poverty reduction. If the farmers are well trained to actively participate in the integration process, they will not continue to rush to urban areas to seek jobs. They can improve and enhance their new life and enjoy the fruits of working in their native areas; thus a focus on improving the rural areas will lead to their development and will avoid the danger of this labor force being marginalized within a strongly globalizing world.

Finally, building wealthy and prosperous urban areas, which will be incentives to develop the economy. Hunger elimination and poverty reduction should be placed in the context of developing the national economy. Developing countries should have strong motivations to make their economies flourish and to successfully carry out hunger elimination and poverty reduction programs. In terms of market, high purchasing power in the urban areas will stimulate production in the rural areas, and this in turn will lead to the further expansion of the market for rural products, and thus speed the process of poverty reduction for farmers. Therefore, if we succeed in solving the conundrum of improving urban purchasing power, the picture of rural areas will also be brightened. Our income tax policy is rather leveling since it ignores geographical differences, i.e. geo-economic factors. We must remember that money is like water, it will run from high level to low level. If we lower the "water level" in the urban areas, the pressure towards distant areas will be consequently low. Many countries have been successful in developing urban areas, which shows that building wealthy and prosperous urban areas will generate motivations to develop the entire national economy.

From all above-mentioned concepts, we want to affirm that hunger elimination and poverty reduction is not only the concern of the poor but also of the entire society. However, the answer to this problem does not lie in digging deeply into the psychology of rich-poor discrimination or driving a wedge between various social forces, but rather by gaining a comprehensive awareness of development rules and building suitable development strategies. A lucid and practical solution in the current context of globalization as a mega-trend is to enhance cooperation among forces and nations, rich and poor alike, and to improve minimum living standards via developing individual capacities. 

Only when the poor become the essential part of the fight against hunger and poverty, can the task of hunger elimination and poverty reduction bear desired fruits.


BWW Society member Mr. Nguyen Tran Bat graduated from Hanoi Construction University in 1972 with a degree in Construction Engineering; in 1995 he earned his LL.B. degree from Law Faculty of Hanoi University.


From 1963 until 1975, Mr. Bat served in the army as soldier and Construction Engineer. After 1975 he held positions at the Institute for Transport Science Research, the State Committee for Capital Construction, the National Office on Inventions under the Ministry of Science, Technology and Environment, and from 1987-89 he served as Deputy Director of the Bureau for Promotion and Development of Industrial Properties Activities.


Presently Mr. Bat is Chairman and General Director of the Investconsult Investment Consultancy and Technology Transfer Company, under the National Center for Scientific Research; he previously held the position of General Director. As Chairman of Investconsult, the firm is now one of Vietnam's leading private consulting groups, specializing in law and IP. The firm has four offices in Vietnam, totaling a full time staff of 220 providing consulting services to foreign businesses and investors, ranging from policy advice, legal advice, project advice and post-license services to public relations and intellectual properties services. Mr. Bat has recently established the first private research institute in Vietnam, the Investconsult Development Research Institute, which covers three levels of research: business and services development, Vietnam development, and global development issues. Mr. Bat is also the founder of Vietnam's first consulting service corporation, which since 1987 has assisted more than one-thousand foreign businesses and corporations with their investments in Vietnam; his client list includes numerous Fortune 500 corporations. The consulting group has also been commissioned by WB, IFC, ADB, UNDP, NGOs and foreign embassies to implement donor-funded projects in a wide range of assistance and developmental programs. Additionally, since 1986 Mr. Bat has been involved in the design and construction of major bridges and roads in Vietnam.


Mr. Bat is a member of the Executive Board of the Club for Enterprises with Foreign Investment Capital and is a member of the Australian Economic Development Committee, the Board of Directors of Beta Mekong Fund Ltd., the Vietnam Engineering Consultants Association, and the Nam Dinh Bar Association; he is the Director of International Affairs of Hanoi Lawyers' Association and Vice Chairman of the Vietnam Industrial Property Association. Mr. Bat is a well-known speaker at many important forums and seminars concerning Vietnamese development issues at home and abroad. In his free time, he enjoys studying foreign cultures, religion, philosophy, reading and economics.  Mr. Nguyen Tran Bat will be a Featured Speaker at the 2003 International Congress of the BWW Society/IAPGS in Malaga, Spain.



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